Support financial entrants to slash banks' monopoly

PRETORIA: South African government and other relevant institutions need to focus on reducing the monopoly in the banking and insurance sectors by encouraging new entrants, Parliament's finance and trade and industry committees have recommended in their report on financial sector transformation.

The report, which is to be tabled in Parliament on Tuesday, is based on extensive public hearings held over the past year. Submissions were received from a wide range of stakeholders including government departments, regulatory and other statutory agencies, industry bodies, business, labour, civil society, political organisations and individuals. The committees' overall view was that the financial sector had transformed since 1994 but that more needed to be done. Their report noted the "huge frustration and anger" among financially marginalised constituencies at what they saw as the failures of the financial sector and the slow pace of its transformation. The inadequate performance of the Financial Sector Charter Council was partly responsible for this lack of transformation, the report said.

The charter itself should set reasonable time frames within which the South African ownership of banks be held mainly by blacks and particularly Africans, with women being adequately represented.

It recommended that effective fines be imposed for the failure of financial institutions to achieve the charter targets. The Black Economic Empowerment Commission was mandated to develop a system of fines and present a policy on this by June 2018. The report recommended that consideration be given to amending the Broad-Based Black Economic Empowerment Act and codes to provide for punitive sanctions.